The Business Case for Corporate Social Responsibility: a Review of Concepts

International Journal of Management Reviews (2010) DOI: 10.1111/j.1468-2370.2009.00275.x The Business Case for Corporate Social Responsibility: A Review of Concepts, Research and Practiceijmr_275 85..106 Archie B. Carroll and Kareem M. Shabana1 Director, Nonprofit Management & Community Service Program & Robert W. Scherer Professor Emeritus, Department of Management, Terry College of Business, University of Georgia, Athens, GA 30602, USA, and 1Assistant Professor of Management, School of Business, Indiana University Kokomo, 2300 S. Washington Street, Kokomo, IN 46904, USA Email: [email protected]; [email protected] In this review, the primary subject is the ‘business case’ for corporate social responsibility (CSR). The business case refers to the underlying arguments or rationales supporting or documenting why the business community should accept and advance the CSR ‘cause’. The business case is concerned with the primary question: What do the business community and organizations get out of CSR? That is, how do they benefit tangibly from engaging in CSR policies, activities and practices? The business case refers to the bottom-line financial and other reasons for businesses pursuing CSR strategies and policies. In developing this business case, the paper first provides some historical background and perspective. In addition, it provides a brief discussion of the evolving understandings of CSR and some of the long-established, traditional arguments that have been made both for and against the idea of business assuming any responsibility to society beyond profit-seeking and maximizing its own financial well- being. Finally, the paper addresses the business case in more detail. The goal is to describe and summarize what the business case means and to review some of the concepts, research and practice that have come to characterize this developing idea. Over the decades, the concept of corporate social Today, one cannot pick up a newspaper, magazine responsibility (CSR) has continued to grow in or journal without encountering some discussion of importance and significance. It has been the subject the issue, some recent or innovative example of what of considerable debate, commentary, theory build- business is thinking or doing about CSR, or some ing and research. In spite of the ongoing delibera- new conference that is being held. Specific journals, tions as to what it means and what it embraces, it news magazines, books, dictionaries, encyclopedias, has developed and evolved in both academic as well websites, discussion lists and blogs treat the concept as practitioner communities worldwide. The idea on a regular basis. The business community has that business enterprises have some responsibilities formed its own organizations specializing in the to society beyond that of making profits for the topic. Business for Social Responsibility (BSR), for shareholders has been around for centuries. For all example, is a business association founded in 1992 to practical purposes, however, it is largely a post- provide corporations with expertise on the subject World War II phenomenon and actually did not and an opportunity for business executives to surge in importance until the 1960s and beyond. advance the field and learn from one another. There Therefore, it is largely a product of the past half has been an explosion of interest in CSR in the Euro- century. pean Union and around the world. The London-based © 2010 Blackwell Publishing Ltd and British Academy of Management. Published by Blackwell Publishing Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA 86 A.B. Carroll and K.M. Shabana Ethical Corporation is another organization that we provide a brief discussion of the evolving under- stages high-profile conferences addressing CSR, standings of CSR and some of the long-established, business ethics and sustainability concerns. Ethical traditional arguments that have been made both for Corporation is an independent media firm, launched and against the idea of business assuming any in 2001, to encourage debate and discussion on responsibility beyond profit-seeking and maximizing responsible business practices. So, while CSR was its own financial well-being. Then we address the once regarded as largely a domestic business issue in business case in more detail. Our goal will be to leading countries of origin, in recent years its popu- describe and summarize what the business case larity has spread onto the world scene, and we now means and to review some of the literature and prac- see CSR initiatives in virtually all the developed tice that has come to characterize this developing nations, and initial thinking and developing taking concept. place in emerging nations as well. The term ‘corporate social responsibility’ is still in popular use, even though competing, complementary Background and historical and overlapping concepts such as corporate citizen- perspectives ship, business ethics, stakeholder management and sustainability are all vying to become the most The roots of CSR certainly extend before World War accepted and widespread descriptor of the field. At II, but we will not go back that far. It should be noted, the same time, the concept of corporate social per- however, that Dean Donald K. David’s comments to formance (CSP) has become an established umbrella the incoming MBA class at the Harvard Business term which embraces both the descriptive and nor- School in 1946 are especially appropriate to recall. mative aspects of the field, as well as placing an Dean David exhorted the future business executives emphasis on all that firms are achieving or accom- to take heed of the responsibilities that had come to plishing in the realm of social responsibility policies, rest on the shoulders of business leaders (Spector practices and results. In the final analysis, however, 2008). In this connection, Bert Spector has argued all these concepts are related, in that they are inte- that the roots of the current social responsibility grated by key, underlying themes such as value, movement can be traced to the period 1945–1960, balance and accountability (Schwartz and Carroll the early years of the Cold War. He has argued that 2008), and CSR remains a dominant, if not exclusive, Dean David and other advocates of expanded notions term in the academic literature and in business prac- of CSR used this as a means of aligning business tice. Just to illustrate how the concept is always interests with the defense of free-market capitalism evolving, CSR International, a non-profit organiza- against what was then perceived to be the danger of tion, announced in 2009 the birth celebration of CSR Soviet Communism (Spector 2008). International, an exciting new organization support- In the 1950s, there was some limited discourse ing the transition from what it called the ‘old CSR’ about CSR. Frank Abrams, a former executive with (Corporate Social Responsibility) or CSR 1.0 to the Standard Oil Company, New Jersey, introduced con- ‘new CSR’ (Corporate Sustainability & Responsibil- cerns about management’s broader responsibilities ity) or CSR 2.0. Whether CSR 2.0 turns out to be in a complex world (Abrams 1951). Abrams argued substantially different remains to be seen. that, as management was professionalizing, compa- In this review commentary, the primary subject is nies had to think not just about profits but also about the ‘business case’ for CSR. In short, this refers to their employees, customers and the public at large. the arguments or rationales supporting or document- And Howard R. Bowen published his seminal book, ing why the business community should accept and Social Responsibilities of the Businessman in 1953 advance the CSR ‘cause’. The business case is con- (Bowen 1953). Bowen’s book was noticeably ahead cerned with the primary question: What do the busi- of its time, by at least a decade, but it came to shape ness community and organizations get out of CSR; significantly future thought on the subject. William that is, how do they benefit tangibly from engaging in C. Frederick, a noted contributor to the CSR litera- CSR policies, activities and practices? For most, the ture, argued that there were three core ideas about business case refers to the bottom-line reasons for CSR that stood out in the 1950s. These included the businesses pursuing CSR strategies and policies. In idea of the manager as public trustee, the balancing developing this business case, we first provide some of competing claims to corporate resources, and historical background and perspective. In addition, corporate philanthropy – business support of good © 2010 Blackwell Publishing Ltd and British Academy of Management Business Case for Corporate Social Responsibility 87 causes (Frederick 2006). During the 1950s, there was 2008), so only some thematic highlights are touched scant discussion of linking CSR with benefits for upon here. The CSR literature expanded significantly businesses themselves. The primary focus was on during the 1960s, and it tended to focus on the ques- businesses’ responsibilities to society and doing tion of what social responsibility actually meant and good works for society. Theodore Levitt closed out its importance to business and society. Keith Davis the 1950s by warning the business world about the argued that social responsibility referred to ‘busi- dangers of social responsibility (Levitt 1958). In nessmen’s decisions and actions taken for reasons at spite of Levitt’s warnings, CSR would grow in popu- least partially beyond the firm’s direct economic or larity and take shape during the 1960s, driven largely technical interest’ (Davis 1960, p. 70). At the same by the social movements that defined the times, espe- time, William C. Frederick argued that businesses’ cially in the US, and by the forward-thinking aca- resources should also be used for broad social goals demics who were attempting to articulate what CSR (Frederick 1960, p. 60), and Joseph McGuire posited really meant and implied for business.

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